I'm the Founder and Managing Partner of Ironfire Capital LLC, which runs a tech-focused hedge fund and angel fund. I did a Ph.D. in Management at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management. You can follow me on Twitter @ericjackson, subscribe to me on Facebook, follow me on Sina Weibo, or Circle me on Google+. My email is: dr.eric.jackson@me.com

They’re absolutely right to do so from a number of perspectives and they have a good shot at being very successful.

It’s no secret that Twitter was interested in buying Instagram themselves. But credit Mark Zuckerberg for moving first, or Twitter dragging its feet or a combination of both, but they are now part of Facebook (FB).

So why not spend a lot of money on buying someone else? Well, first, Twitter is still private, so they can’t pay for half the purchase with funny money stock as Facebook did. But, second, who exactly would they buy and would it be a better use of cash compared to if they just built something themselves and turned it over to their rabid user base?

CEO Dick Costolo apparently agreed and chose to do-it-himself.

The new photo-service will apparently feature filters.

I’ve seen some people snobbily react to this feature by saying, “well, Instagram is certainly more than just filters… so good luck with that.”

Well, filters are a big part of Instagram’s success. The other part of it is sharing with their friends. However, Twitter already has a huge user base and – for now anyway – still syndicates its tweets on Facebook so people will be able to see their Twitter pictures there.

The last piece of the secret sauce for Instagram is allowing one place on the app to scroll through all the various photos your friends have posted and then comment on them or like them. You do that now as a stand-alone part of the Instagram app. You don’t interact with the Facebook app in any way (other than pump up their MAU and DAU numbers). Twitter would obviously have to offer a similar feature.

Is any of this rocket science? No.

I don’t mean to take anything away from Kevin Systrom and the 12 other guys at Instagram who stayed focused and got Facebook to pay them one-quarter of the value of what George Lucas built up over a lifetime. More power to them.

But let’s not pretend these guys created the cure for cancer.

Twitter is incredibly smart to systematically copy Instagram and rip out the foundation of value from that company and from Facebook over time.

There’s no love loss between these companies – despite Costolo dropping in to chat with Zuckerberg this week. Peter Thiel said you could throw a bomb into Twitter headquarters at 6pm and no one would get hurt because they’d all gone home for the day. Zuckerberg took a shot at Twitter on the last earnings call by saying that Instagram had passed it in terms of mobile popularity.

So, good for Twitter. Better photo sharing is what their users like me want and they’ll use it if it’s just as good as Instagram.

As I said last month, Instagram is a great mobile app – just like Lycos was a great search engine before we knew about Google (GOOG).

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